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ONE FAMILY'S INSURANCE STORY

The Jefferson family of Tucson knows what it's like to go without insurance.

Heather Jefferson's husband, Paul, 34, was a teacher in a district that offered health coverage. But his share of the family policy would total $700 a month out of his paycheck, more than the family felt it could afford.

The family made too much money to qualify for a state-backed health plan and too little to afford a family policy on the individual market. So, they bought coverage for their two children, and Heather signed up for her coverage at her job. Paul went without for about three years.

"We just hoped and prayed that nothing would happen," Heather says.

Luckily, Paul did not become ill. Even with the policy for her children, Heather says, the couple paid about $200 a month for prescription drugs for the kids.

Something, she says, needs to be done about costs, adding that the problems are so complex that it's hard to come up with solutions.

Still, she thinks that executives at medical corporations need to think more about how they set prices.

"Corporations need to think about how much it's going to hurt someone if they raise the price of a particular product so high," she says.

In January, her husband left his teaching job for a position with a private company, a job that came with affordable health benefits for the whole family. They signed up.

"The first thing we celebrated was the fact that we all had insurance," Heather says.

By Julie Appleby

UNINSURED MORE DISSATISFIED

Levels of dissatisfaction with the U.S. health system vary sharply between the insured and those who have no health insurance:

The U.S. health care system — touted as providing the best medical care in the world — is becoming more precarious to most Americans, who are rattled by rising costs, questions about quality and fears about the future.

"If you can afford it, it's the best health care system in the world, but, increasingly, people aren't able to afford it," says Clyde Bishop, a retired research scientist in Wilmington, Del.

He was among those polled about the health care system in a wide-ranging national telephone survey taken in early September by USA TODAY, ABC News and the Kaiser Family Foundation.

The poll found a growing unease in America about the rising cost of health care, confusion about the causes, and a desire for major reform. But it also found a distaste for giving anything up to achieve sweeping changes.

An overwhelming 80% of respondents said they were dissatisfied with the total tab the nation spends on health care, estimated to hit $2.2 trillion, or $7,129 a person, this year. The survey, based on a national sample of 1,201 adults, has a margin of error of plus or minus 3 percentage points.

"Every year, we wind up paying more and getting less coverage," says Tammy Dougherty of El Paso. Dougherty, another poll respondent, has health insurance through her husband's job.

Few, however, correctly singled out the biggest drivers of spending, choosing instead culprits that get a lot of attention — such as profits of medical companies or malpractice lawsuits — but play a lesser role.

Quality was also an issue: Only 44% said they were satisfied with the quality of health care in the USA, although nearly 90% said they were satisfied with their own medical providers.

While solutions to rapidly rising costs remain elusive, some early steps are being taken to try to slow the rise and improve quality. For example, many U.S. hospitals are working to reduce errors and cut complications, steps that not only improve care but can also reduce costs.

A handful of researchers are conducting cost-benefit studies, comparing one type of drug or treatment with another to find which gives the best value. Results may lead some insurers or government programs to limit the use of less-effective treatments or to charge patients more if they choose the less-effective, more-costly option.

Meanwhile, other researchers are pondering the reasons behind the vast differences on what is spent for certain surgeries or end-of-life care from one part of the country to another.

Even with such efforts, most economists predict that health care spending will continue to grow faster than the economy — and far faster than wages.

Already, the average yearly cost of the most popular type of insurance plan offered by employers hit $11,765 this year, with the average employee paying $3,226 of that total, a Kaiser Family Foundation study shows. Average premiums have risen 87% since 2000, while workers' earnings have risen 20%.

The quality movement is still in its early stages.

"It's the beginning of a campaign that looks promising," says Uwe Reinhardt, a professor of economics at Princeton who focuses on health care costs. "In some instances, (the quality movement) will probably reduce costs. But some (quality efforts) will actually cost money."

So what's driving the rapid rise of health care spending ?

Major drivers of medical inflation include how rapidly Americans embrace new drugs and technology, which are often more expensive than older treatments. Public demand is a big factor. Patients generally want the newest treatment, equating new with "better," even before solid proof exists.

Americans did not always select the same culprits for rising spending as do economists.

In the survey, only 28% picked new drugs, treatments and technology as among the single biggest factors, while the smallest percentage, 12%, said costs are rising because more people are getting better medical care than ever before.

Half of respondents blamed profits of drug and insurance companies as one of the single biggest factors, while 37% blamed too many medical malpractice lawsuits, and 36% blamed doctors and hospitals making too much money.

"Profits might explain part of why costs are high, but it doesn't explain why costs are rising," says Paul Ginsburg, an economist at the Center for Studying Health System Change. New treatments and increased demand are fueling the rise, he says.

"The thing I find dismaying is the public doesn't recognize that it's the additional medical care they're getting that's driving costs up," Ginsburg says. "They have to come to grips with the fact that we won't be able to slow the rise in costs without making trade-offs."

Misplaced focus

Reinhardt also says the focus on profits is misplaced.

Hospitals typically have margins of 5% or less, insurers range from 5% to 8%, while drug industry profits are higher, in the 15% to 20% range, he says. But, he says, even those profits can't be blamed for rapidly rising health care spending.

"I once calculated that if you rebated all the drug company profits to patients, health spending would only go down by 1.2%," he says.

Poll respondents were closer when it came to fraud and waste, with 37% choosing it as one of the biggest drivers. Reinhardt and others have said that fraud along with overuse and waste are big players in rising costs. Overuse and waste can include unnecessary treatments, tests repeated because original results were misplaced or reliance on ineffective treatments.

"Several credible estimates have come up with around 30% of health care is unnecessary," says Richard Deyo, professor of medicine at the University of Washington in Seattle. "I suspect even an ideal system would have some unnecessary care delivered, but 30% seems a high percentage."

Few saw any consumer responsibility in rising costs, with only 29% citing Americans' unhealthy lifestyles as one of the biggest factors.

The poll results point out the difficulty policymakers will have in trying to slow costs. While medical care has certainly improved over the years, it has also become more expensive. Reinhardt says people can't be blamed for wanting 2006 medicine, rather than 1980s medicine or 1960s medicine, but they have to realize it comes at a cost.

"The overarching theme is that this cost explosion isn't my fault," Reinhardt says. "It's all these other culprits, such as drug company profits or this or that. If we don't really know the right target and shoot at the wrong target, we'll never get where we need to go."

No magic solution

Health policy experts say there is no magic solution to controlling costs.

"The current era of shifting costs to workers has hurt working people but has not had much impact on health care costs," says Drew Altman, president of the Kaiser Family Foundation. "But the American people have little appetite for slowing the spread of new medical technology, which is the biggest driver behind rising health care costs."

Current cost-control efforts include evaluating hospitals and doctors based on their quality and cost, then having insurers channel patients to the most efficient providers. Some insurers are also experimenting with paying hospitals and doctors a premium for providing the best care with the fewest problems.

Another idea now in vogue in political and health policy circles — that patients will be more judicious users of medical care if they have to pay for more of it themselves — is not popular with poll respondents. When asked if they would favor an insurance policy that covered mainly major medical problems, with more routine doctor visits and treatments paid for out of pocket after the patient exhausts a set pool of money, 66% opposed.

Such an idea is one of the cornerstones of the so-called consumer-driven movement in the USA, with proponents touting high-deductible insurance policies that are linked with tax-free savings accounts into which patients and/or their employers could deposit money to be used to meet the policy's deductibles. Money not used each year would roll over into the next.

Supporters say such plans will counter a belief fostered by HMOs — with low or no deductibles and small fees for seeing doctors — that health care was cheap. But critics, such as Consumers Union, say the approach will hurt those who have chronic illnesses and use medical services more than average and would never be able to save.

Only a few million such policies now exist, but benefit experts say they expect more employers to offer them in the coming years.

Among those who favored the idea was poll respondent Heather Jefferson, who says health savings accounts may get people to plan for medical costs.

"It's along the lines of setting aside for a rainy day," says Jefferson, 34, of Tucson. "A lot of people don't plan ahead and prepare themselves for the car breaking down or getting sick and not being able to work."

Rather than controlling costs, most of the reform ideas under debate in Congress and the states focus more on reducing the number of uninsured, which may or may not reduce total costs. Covering more people with insurance would likely increase spending initially, as more seek medical care. In the long run, the spending growth might slow if more patients receive preventive care or treatment in the early stages of a disease.

One of the longest-running debates is whether the U.S. should adopt some kind of universal coverage, such as those systems in Europe or Canada, where everyone has health care, financed mainly through taxes. Or if it should stick with the current system, which relies on voluntary efforts by employers and a private market.

Most survey respondents, 56%, said they prefer a universal system. But support for changes to the system dropped to about one-third or less when respondents were asked if they would support universal coverage if it included restrictions on the doctors or treatments they could have or if it cost them more than they're now paying in taxes or premiums.

Significant majorities of poll respondents supported ideas for more incremental, but nonetheless controversial, efforts to reduce the number of uninsured:

• 79% support requiring businesses to offer health insurance to full-time employees, and 64% said employers should be required to cover part-timers, as well.

• 65% support requiring all Americans to have health insurance, either from an employer or another source, with tax credits to help low-income people pay for it.

• 82% support expanding other government health programs such as Medicaid or the Children's Health Insurance Program, which provides insurance to nearly 4 million children and some parents, to cover more people.

Fewer employers offer benefits

Most poll respondents recognized that it is better to have insurance than none at all.

About six in 10 told pollsters that they fear rising costs — or a job loss — will someday banish them from the ranks of the insured.

Bishop, 66, who gets health coverage through his wife's employer, says he was forced to retire earlier than he had expected from his research scientist job for a plastics company and is looking for a new job.

While worried about his own opportunities, Bishop says, he also fears for the country in an era that is seeing a shrinking percentage of employers offering insurance and other benefits. Last year, the percentage of people who received health insurance through their jobs was 59.5%, Census Bureau data released in August show. That's the lowest rate since 1993 and below the recent peak of 63.6% coverage in 2000.

"No one wants to give you pension benefits or health plans or anything else these days," Bishop says. "It's a dissolving of the middle class."

Nationally, nearly 16% of the population, or 46.6 million, are uninsured, according to recent Census estimates.

Slightly more than half of those polled, 52%, say the rising number of uninsured is a "critical problem" for the USA.

"My daughter does not have any health care, and she has four little ones," says Dougherty in Texas. "If it weren't for Planned Parenthood, where she can go and get care, she would not have any medical care at all."